Here we go again with the onslaught of farmgate milk price cuts.
For dairy farmers, and there aren’t many left in Scotland, any cut in farmgate price is a painful pill to swallow.
Yet it shouldn’t come as a surprise.
Arla’s decision last week to drop its milk price with three days’ notice by 1.27p to 33.74p a litre certainly set the tone for the week ahead.
It has long been said that the European dairy co-operative, which buys milk from one in four British dairy farmers, is the price-setter in the UK market.
The co-op adopts a “one price for all” approach, linked to the European and global markets, for its 12,000 dairy farmer members.
The next major dairy player to follow suit was Muller Wiseman – without a doubt the biggest milk buyer in the north-east – slashing its standard non-aligned milk price, albeit from June 1, by 1.6p to 32p a litre.
And last night UK dairy farmer co-op First Milk dealt the biggest blow to date slashing its liquid pool price by 2p to 30.5p a litre from June 1.
The co-op also cut its manufacturing pool price – milk for cheese – by 0.5p to 32p a litre warning further cuts were likely as the contract has a global commodity market element built into it.
All three processors blamed a downturn in global markets for the cut in prices.
And with the UK producing record levels of milk, it has been reported that smaller processors are taking a real hit being forced to sell milk on the spot market for as low as 12p a litre in some cases.
It’s worth casting your mind back to 2012.
The sudden cut in milk price experienced by farmers, as a result of a crash in the price of cream, came as a shock to the industry sparking widespread farmer protests in what became known as the SOS Dairy campaign.
Yet it was a wake-up call to all that the UK market is not isolated from the rest of the world and we cannot be shielded from the volatility of global commodity markets.
Special market tracking contracts have since being launched – Muller Wiseman producers, for example, can sign up all or some of their milk to a special formula contract which tracks global markets and competitor prices.
This week, it won’t just be the price cut that is leaving farmers fuming, but the fact processors are, it would seem, quick to drop prices when commodity markets fall and slow to reward farmers when the markets are up.
NFU Scotland this week spoke of farmer frustration at just that, warning the recent milk prices highs should have come sooner and in some cases were not high enough.
Another bone of contention in the industry is surely the dairy voluntary code of practice – something not all dairy processors, including Graham’s Family Dairy, have signed up to.
Currently under review by former Scottish Parliament presiding officer Alex Fergusson, the code was developed at the height of the SOS Dairy campaign setting out guidelines for contracts between farmers and their milk buyers.
It sets out different rules for co-operatives and non-co-op dairy businesses.
Essentially a co-op can cut its milk price with little notice, while a non-co-op must give a month’s notice otherwise farmers have the right to leave with a three-month notice period.
There’s no doubt Muller will be fed up it has to give advanced warning on price cuts, while its main competitor Arla can cut the price at the last minute and not be concerned its suppliers are going to jump ship.